First Solar Earns 3 Upgrades Ahead of Earnings

Tempe, Ariz.-based First Solar Inc. (FSLR) is slated to report first-quarter 2017 earnings on Tuesday after market close. After shares went on a roller coaster ride following the election of coal champion Donald Trump to the White House and the announcement of a costly restructuring, FSLR stock has rallied about 10.3% in the last two weeks, trading up 0.4% on Tuesday at a price of $29.66 per share. (See also: Can First Solar Rebound After 2016's Decline?)

While analysts at JMP Securities, Roth Capital and Credit Suisse upgraded FSLR shares and lifted price targets just ahead of earnings, bullish notes have more to do with a recent petition from a small Atlanta-based solar cell and module manufacturer expected to benefit the solar industry at large.

Tariffs Could Lift U.S. Leaders

Analysts speak to solar company Suniva Inc.’s compliant filed under Section 201 of the Trade Act of 1972, in which the firm is petitioning the U.S. International Trade Commission (ITC) to impose temporary tariffs on Chinese-manufactured solar cells and modules. Suniva indicates that below-market prices from the Asian giant contributed to the firm’s bankruptcy and is asking the government to raise tariffs to ensure that imported solar panels costs at least $0.78 per watt, and that imported solar cells cost at least $0.40 per watt, twice the current market cost. (See also: Solar Petition Could Boost Domestic Solar Firms.)

Analysts at JMP upgraded FSLR to market perform, suggesting that Suniva’s petition could be “materially positive” for First Solar, as tariffs would make its products more price competitive. Roth Capital followed with an upgrade of First Solar shares to buy, along with a $40 price target, foreseeing more than a 50% probability that Suniva’s petition will be granted. On Monday, analysts at Credit Suisse upgraded First Solar from underperform​ to neutral, lifting its price target to $31 per share, highlighting that 23% of FSLR stock is currently sold short.

Last quarter, First Solar pleased the Street with a positive earnings surprise of about 28%. In the firm’s 2016 Q4 earnings call, management said it expected to post a loss between $0.10 and $0.15 per share in Q1. (See also: First Solar Blows Past Analysts' Q4 Estimates.)